Today about 1.2 billion people are living on an income of less than US$1 per day. According to ILO estimates about 100 million of these extremely poor people are older than 60.

Being old and poor means that people have little hope and few means to improve their lot. Poverty and destitution tend to become permanent. The risk management strategies that are open to younger members of a society (holding multiple jobs, subsistence farming, selling of assets, acquiring new skills in an effort to improve employability) are often no longer available to the elderly. There are studies from South Africa which demonstrate that the payment of a small old-age pension to the elderly on a universal or means-tested and tax-financed basis , not only improves the life of the elderly and helps to reduce old-age poverty, but it also has beneficial effects for whole family - notably for families in rural settings or the informal economy. They could probably raise school attendance rates and there is evidence that average weight, notably for girls, is highly correlated to the receipt of basic pensions by the grandparents. The elderly are thus used as "agents" for social assistance in their families, as they are often the ones deciding on spending priorities in the households if they are the only persons that are bringing cash income into the household. It appears that tax-financed basic pensions could be a powerful tool against poverty.